COMMERCIAL banks are increasing the interest rates offered on credit cards as the Bank of Jamaica’s (BOJ) policy rate remains at its highest level since February 2011.

Sagicor Bank Jamaica Limited (SBJ) increased the unsecured interest rate on purchases for its standard, gold and platinum Mastercard credit cards by 100 basis points (1.00 per cent) each, with the Mastercard business card seeing a 425-basis point hike when compared to the May 2022 rates. These hikes took effect on January 18, with Sagicor Bank increasing the interest rate on variable rate loans and deposits by a maximum of 2.50 and 2.00 percentage points, respectively, on January 26.

The Bank of Nova Scotia Jamaica Limited (BNSJ) increased the interest rate on its Mastercard and Visa credit cards by 100 basis points, which is set to take effect on February 6. The fee guide revealed that this means the effective interest rate for a Scotiabank Mastercard is 58.57 – 67.96 per cent, with an annual interest rate of 47.00 – 52.99 per cent.

This is on top of the hike in loan rates which saw new mortgage rates offered increase by 150 basis points and unsecured loans move by 300 basis points when the September 2022 and January 2023 rates were compared. Some customers with existing mortgages will see the interest rate charged increase by as much as 1.00 percentage point today.

National Commercial Bank Jamaica Limited (NCBJ) increased the rates on its credit cards last July, with the interest rate on unsecured cards increasing between 2.00 – 6.96 per cent when compared with the March 2021 schedule. NCBJ personal and SME customers will see an increase on existing variable rate loans by an average 97 basis points today while existing business interest rate loans are set to increase between 0.23 – 1.75 percentage points. New loans since October 1 have seen the interest rate offered increase by 15 basis points.

First Global Bank Limited (FGB) rates as per its November schedule were unchanged when compared to October 2021, but a customer email revealed that the unsecured interest rate charged on its Visa Classic Credit card increased by 0.50 per cent from 48.85 per cent to 49.35 per cent on October 1. FGB also increased the interest rate charged on all loans by up to 2.00 percentage points on January 22.

JN Bank Limited’s unsecured interest rates on its two credit cards remain at 34 per cent since April 2019. First Caribbean International Bank (Jamaica) Limited’s interest rates on credit cards remain unchanged as per September 2022. JMMB Bank (Jamaica) Limited is set to introduce credit cards shortly while the Victoria Mutual Building Society’s (VMBS) two recently launched credit cards carry unsecured interest rate of 37 – 40 per cent.

Most commercial banks had fee adjustments in 2022, with none announcing an increase for 2023. However, several have announced increases on deposit rates offered to customers which came at a time when the BOJ published all the deposit rates by the commercial banks for savings, demand and time offerings.

“In addition to the initiative above, Bank of Jamaica has been in dialogue with the minister of finance and the public service about deposits of public bodies held in the commercial banking sector with a view to the GOJ earning the most competitive interest rates on those deposits,” read the BOJ’s monetary policy committee minutes for the December policy decision.

The United States Federal Reserve is set to announce its policy decision today, with the current rate sitting at 4.25 to 4.50 per cent. The BOJ MPC minutes stated that it expects the fed to hike rates by an additional 25 to 50 basis points (0.50 per cent) as the US central bank deals with elevation well above its 2.00 per cent target. The BOJ’s policy rate is currently at 7.00 per cent, with the MPC set to meet on February 20 for its next decision.

“It appeared that some banks may have executed fixed rate loan contracts with some of their customers which may have prevented them from adjusting their business rates in line with the central bank’s policy actions. Beyond this, commercial banks may have been sensitive to the impact of higher rates on the size of their non-performing loan portfolios,” the minutes read on the transmission mechanism through commercial banks.